Joseph Goebbels at an exhibition of 'degenerate art' in Berlin, 1938. He was among those to have meddled with the book. Photograph: Alamy

Four years ago, an English translation of Alone in Berlin – Hans Fallada's thriller set in Nazi Germany – became a publishing phenomenon more than six decades after he wrote it. Following that astonishing success, Penguin Classics is now bringing out Iron Gustav: A Berlin Family Chronicle, Fallada's powerful portrayal of the devastating effects of the first world war on a family and a country, written in 1938.

The project went through a tortuous journey, with rewrites ordered by Joseph Goebbels, Hitler's propaganda chief, which have been taken out of the new edition. It does not include, for example, an ending in which the main protagonist joins his son in becoming a member of the Nazi party.

In the introduction to the edition, Fallada's biographer Jenny Williams writes that when signing a 1937 contract for a story of "a German family" from 1914 to 1933, Fallada little suspected how much grief it would cause him.

Fallada refused to join the Nazi party and was denounced by neighbours for "anti-Nazi" sympathies. Goebbels made clear that if Fallada did not know what he thought of the Nazi Party, then the Nazi party would draw its own menacing conclusions. Succumbing to the pressure, Fallada added passages, making a son of Gustav a stormtrooper and showing that membership of the party made someone "a real man again".

In a 1946 letter he admitted that the changes were made from fear: "The guilt of every line I wrote then still weighs on me today." As it transpired, the book was still deemed to be insufficiently pro-Nazi and was removed from shops.

Puttnam publishers brought the novel out in Britain in 1940, censoring material perceived to be too pro-German. Nicholas Jacobs, co-translator of the new edition, has reinstated some 85,000 words: "Up to a third [of the new English edition] is new."

Williams points out that the novel is not a paean to National Socialism, and that Fallada did the minimum to satisfy Goebbels. She said: "Fallada, who later described these changes as 'stupid tinkering around', expected that they would not satisfy Goebbels".

Penguin describes Iron Gustav as a classic example of Fallada's gift for acute observation, capturing the joys and tragedies of ordinary lives: "a vivid family chronicle" from the first world war to Hitler's takeover.

Williams told the Observer that the new edition is "as close as possible" to Fallada's original: "It's very exciting."

Fallada died aged 53, before Alone in Berlin was published. Now the book is to be turned into a film by Vincent Perez with a cast that includes Emma Thompson.